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As the Taxi Industry Faces Stiff Competition From Uber and Lyft, it Begins to Seek “Fare”-ness

by Adam Thorwart | 5月 12, 2014

“If it ain’t broke, don’t fix it” is an age-old adage, but the taxi industry’s adage went a little more like: “the world knows our system is broke and there isn’t anything a consumer can do about it, so we’re not changing.” That adage rang true for a long time until services like Uber and Lyft revolutionized a basic service feature: availability. I have heard a lot of different arguments against Uber and Lyft and it basically boils down to price and efficiency.

The argument against the price is legit because taxi companies pay (by all accounts) major regulator fees/taxes causing fare prices to increase. However, price level seems less important to a user since getting from point A to B trumps price. So the question becomes why are the taxi companies losing consumers? The answer is efficiency/ease of use. Rather than trying to get a cab on the street (especially in inclement weather), Uber users can simply send for a ride and can even pay with a PayPal account. Hailo is another service like Uber, but the main difference is that Hailo works with black cabs in London.

How popular is the Uber, Lyft, and Hailo apps? According to AppTRAX - Strategy Analytics’ proprietary research – Uber in the UK has an average iPhone ranking just outside of the top 200 for 2014; last week it ranked 183. Uber is much more popular in the US with an average iPhone 2014 ranking right around 100. Hailo and Lyft are not ranked in the top 300 UK iPhone rankings during any week of 2014.

Based on the popularity rise of the aforementioned Uber and Lyft, there have been several responses by the taxi industry across the globe challenging the fairness of such services. Below are a few of the recent responses by the taxi industry (other responses were found in Berlin, Brussels, and Paris).

First response: London’s 10,000-car protest.

It’s being reported, by Bloomberg, that London taxi drivers are planning to stage a 10,000 car demonstration near a historic landmark in London, the exact location is not yet known (and probably for good reason).

Take a step back and look at the first response on face value. The taxi industry “aka big brother” is angry that services like Uber and Lyft “aka little brother” are taking profits from them. However, instead of fixing its problem and becoming more efficient (by developing similar apps), the UK’s Licensed Taxi Driver Association responds by not only becoming less efficient during the protest, but also making businesses in the “protest zone” less efficient for as long as the protest continues. Lost in the protest is the irony - if no taxis are to be found then non-Uber users may opt to use the service during the protest thus driving up Uber and Lyft usage.

Second response: a Fujitsu and MIT study, leads to utilization of Uber-like app technology for cab hailing.

Engadget reported late last week that MIT and Fujitsu ran a study on how taxis are underutilized, yet are never there when needed. As a result of the study, on-demand technology was provided to cabs and users could pick from 3 modes: taxi, ride-sharing, and fixed route modes. Each of which can be “ordered” by the user who then receives boarding times and fare prices. A test run in Tokyo yielded in 80% more profits.

Unfortunately, Fujitsu’s goal for full operation is 2016 which seems too far off and by then traditional taxi companies might already become more of a (if not completely) forgotten commodity than it already is. The Licensed Taxi Driver Association in London should spend more energy following Fujitsu’s model and begin establishing a developing body to help taxi companies become more efficient.

The taxi industry isn’t the first industry disrupted by smartphone apps. Banking and operator messaging (among other) industries were also affected by the functionality of mobile apps. As mobile banking became more popular, developers began making the app features (mobile check deposit, ability to pay bills, etc.) so functional that the need to visit a branch on a routine errand is almost non-existent. Mobile banking app users can simply take a picture of and deposit a check on the spot. Operator messaging services were severely hurt by the development and popularity rise of mobile messaging apps, as detailed in the Operator Messaging to Decline 20% by 2017 report by Strategy Analytics’ Director of Wireless Media Strategies service Nitesh Patel.

Taxi services may be the first automotive industry to be affected by smartphones and app, but it certainly won’t be the last. It is only a matter of time before the phone and car become one and the user can simply check on a smartphone what needs replaced (tires, battery, brakes, etc.) and can search local auto body shops for the best prices. That type of technology will actually hurt large brands more than help because if a mechanic at a local mom and pop run business can do the work cheaper than places like Ford and GMC might lose those consumers. 

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